The Russian labor market: Long-term trends and short-term fluctuations

Abstract

This paper provides a statistical portrait of the Russian labor market during the latest period of 2010–2022. The analysis delves into both the long-term trends in its evolution and short-term fluctuations associated with its adjustment to economic downturns. The most noteworthy among the long-term changes are a gradual shrinkage of the labor force and employment, the transition to record low unemployment, a sharp acceleration in worker turnover, and the emergence of an extensive overhang of unfilled job vacancies. During the period under review, the Russian economy experienced three strong adverse macroeconomic shocks — the first sanctions crisis in 2014–2015, the corona crisis in 2000–2021, and the second sanctions crisis, which began in 2022 and is still far from over. The paper provides the evidence that the Russian labor market has retained the same algorithm for accommodation to economic downturns, which it developed back in the 1990s. A distinctive feature of this specific model is that the negative shocks are absorbed predominantly through declines in wages and reductions in working hours, rather than through contraction of employment and surge in unemployment. The general conclusion is that the Russian labor market is undergoing a transition from a functional regime marked by tight labor demand to another characterized by tight labor supply.